MarketingShift Online Marketing Blog

Monday, April 14, 2008

Short Circuited: Blockbuster Bid Doomed

Blockbuster wants to buy electronics chain Circuit City and will pay shareholders about twice the stock price to do so.

This is a bad decision at a bad time that will result in Blockbuster's demise. I fully agree with Don Reisinger that Blockbuster is headed in the wrong direction by going into consumer electronics.

Blockbuster's lunch is being eaten by Netflix and video on demand services. So instead of acquiring another digital content company or Internet play (adding to last year's Movielink deal), Blockbuster is going into consumer electronics. Blockbuster has to figure out how to get into people's TVs and broadband connections, and selling video games at retail isn't the solution. Buying TiVo or someone in the digital content arena would have been a much better move.

Blockbuster won't turn around Circuit City, which faces more competition. If anything the acquisition should have gone the other way.

Look for Comcast or Time Warner to buy Blockbuster in about a year and spin off the Circuit City business.

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